VC investment rebound fuels IPO activity, but sustainable earnings remain key

Samjong KPMG releases report on IPO trends through VC investment lens

Venture investment hits 8.8 trillion won in H1 amid deep tech surge

83% of Kosdaq listing rejections tied to earnings concerns

Samjong KPMG's report on IPO market trends through the lens of venture capital investment [Samjong KPMG]

The venture capital market is staging a sharp recovery, led by future growth industries such as AI, semiconductors and biotech, opening up significantly more opportunities for technologically capable, high-growth companies to pursue initial public offerings.

However, demonstrating sustainable earnings and strong commercialization capabilities — not just technological prowess — has emerged as the central challenge for a successful listing.

According to a report released Tuesday by Samjong KPMG titled "IPO Market Trends Through the Lens of VC Investment," domestic new venture investment reached 13.62 trillion won ($10.1 billion) last year, up 14.0 percent from the previous year. In the first half of 2026, investment climbed a further 56.2 percent year-on-year to 8.87 trillion won, sustaining the recovery momentum.

Investment, however, is not flowing evenly across companies — it is concentrating in firms that have clearly demonstrated growth potential and profitability. The average investment per portfolio company has risen consistently: 2.54 billion won in 2024, 3.01 billion won in 2025 and 3.86 billion won in the first half of 2026.

Four key issues surrounding the venture market and IPOs, and their market implications [Samjong KPMG]

By company age, investment in early-stage firms with three or fewer years of operation surged 57.7 percent year-on-year, driven by expanded early-stage commitments from the Korea Fund of Funds and large funding rounds secured by deep tech startups in AI, semiconductors and robotics.

By sector, ICT services and biotech and healthcare continued to lead the market, while investor attention broadened into deep tech areas including robotics, fuel cells, aerospace and AI semiconductors. Biotech and healthcare investment in the first half of this year jumped 92.7 percent year-on-year to 1.5 trillion won, and the electrical equipment and machinery sector rose 54.0 percent to 1.5 trillion won. ICT manufacturing surged 146.9 percent to 1.1 trillion won, emerging as a primary investment destination.

Particularly notable at the subsector level were large pre-IPO rounds raised by AI chipmakers: Rebellions secured 640 billion won and Furiosa AI raised 400 billion won.

Trends in technology company listings on Kosdaq [Samjong KPMG]

IPOs are also playing a growing role as an exit route for venture capital. The share of VC exits via IPO rose from 24.3 percent in 2022 to 37.9 percent in the first half of this year, while exits through asset sales fell from 56.5 percent to 47.7 percent over the same period. On Kosdaq, the proportion of technology company listings using the technology evaluation and growth potential special listing tracks expanded from 25.7 percent in 2018 to 56.3 percent in the first half of 2026, reflecting their growing use as a pathway for tech firms to go public.

Yet the prevailing IPO review climate has tightened scrutiny not only of technological originality but also of business viability, profitability and the sustainability of earnings. In practice, 83 percent of companies that withdrew or were denied preliminary listing approval from last year through the first half of this year were affected by earnings-related issues, including sales stability and profitability. As a result, demonstrating concrete commercialization potential — including target market size, secured sales channels, and production and financing capacity — has become a prerequisite.

The report advises companies preparing for an IPO to build an earnings base and business model that can be sustained after listing. To that end, it recommends that companies proactively review customer concentration, accounts receivable collectability, inventory buildup and the reasonableness of projected sales, while also putting in order their internal control systems, related-party transactions, conversion terms for redeemable convertible preferred shares and convertible bonds, and the volume of shares eligible for trading after listing.

The shifting definition of IPO success: from completing a listing to achieving market stability and actual returns [Samjong KPMG]

Kang In-hye, deputy managing partner and head of Samjong KPMG's IPO Support Center, said companies should treat an IPO "not as a short-term event, but as an ongoing process of managing earnings and share price after listing." She added that companies preparing to go public "must proactively address the basis for projected earnings, internal controls, plans for using proceeds, and overhang risk."

Kang also said venture capital firms "should view a listing not as an immediate exit point, but develop a phased exit strategy that accounts for lock-up periods and market absorption capacity," adding that "a long-term investment and exit strategy spanning from the investment stage through the post-IPO period will become increasingly important."

Meanwhile, Samjong KPMG, which operates on a March fiscal year, posted operating revenue of 905.6 billion won for the current fiscal year running from April 2025 through March 2026, up about 3.4 percent from the previous year, crossing the 900 billion won threshold for the first time.

an@heraldcorp.com